Commercial Law - UNJUST ENRICHMENT - Defences

Appeal by Ivancic from judgment in favour of the Palkowskis in their claim to have their former home re-conveyed to them by Ivancic, subject to a payment to Ivancic to reflect his contributions to the home including a cash payment. The parties entered into an agreement pursuant to which Ivancic would purchase the Palkowskis’ home at a price much below its market value in an attempt to defraud their creditors, by tricking them into believing that the Palkowskis could not pay their debts. They had an oral agreement allowing the Palkowskis to live in the home, reimburse Ivancic for the carrying costs of the mortgage, real property and taxes, and that Ivancic would re-convey the home sometime later. Litigation ensued in 2015, when Ivancic refused the Palkowskis’ demand that the property be re-conveyed to them. They claimed that Ivancic held the property in an express trust for them. They also claimed unjust enrichment and a constructive trust. The judge found the property sale agreement a sham. The express trust claim was dismissed because the parties had no agreement in writing. The judge found that Ivancic was enriched and that the Palkowskis were correspondingly deprived of their interest in the home, with no juristic cause.

HELD: Appeal dismissed. The agreement could not constitute a juristic reason for Ivancic’s enrichment and the Palkowskis’ deprivation of the home, given the judge’s finding that the agreement was a sham. The judge gave due consideration to the doctrine of clean hands. The remedy fashioned was not challenged by Ivancic on appeal.